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Nintendo shares plunge on Pokemon Go warning

25 July 2016, 11:32

Tokyo - Shares in Nintendo plunged Monday after it warned that the Pokemon Go mania sweeping the world would not translate into bumper profits, taking the wind out of a dizzying rally that saw the firm's value more than double.

The stock dived 17 percent to 23,405 yen by the break after the Kyoto-based firm warned in a statement Friday evening that the hugely popular game would have only a "limited" impact on its bottom line.

Markets had cheered the app's global success as a great sign for Nintendo's nascent move into the mobile games market.

That sent it soaring as investors bought the narrative, pushing it above 30,000 yen at one stage - and briefly making the firm more valuable than Sony.

But analysts had warned that the rally was overdone since the actual impact of the game on Nintendo's finances would be moderate at best -- a point it confirmed on Friday.

Nintendo is the creator of the Pokemon franchise but the game, released on July 5, was developed by US-based Niantic. The Japanese firm's affiliate, Pokemon Company, is on track to receive licensing fees for the game.

Nintendo has invested in Niantic and owns about one-third of the Pokemon Company.

It also stands to make money from a device to be used with the application called "Pokemon Go Plus" but "the income reflected on (Nintendo's) consolidated business results is limited", it said.

Also read: Pokemon Go craze finally hits Japan

"Taking the current situation into consideration, the company is not modifying the consolidated financial forecast for now," the statement said.

Since its launch Pokemon Go has sparked a worldwide frenzy among users who have taken to the streets with their smartphones.

The app uses satellite locations, graphics and camera capabilities to overlay cartoon monsters on real-world settings, challenging players to capture and train them for battles.

- 'Uneasy' -

Pokemon Go was seen as a shot in the arm to Nintendo - which also created the Donkey Kong, Super Mario and Legend of Zelda brands - after it abandoned a longstanding consoles only policy and opened the door to licensing some of its characters for mobile game use.

"I think Nintendo issued that statement because it was uneasy with how high the shares were rising," said Hideki Yasuda, analyst at Ace Research Institute.

"There has been a view that Nintendo cannot succeed in the smartphone business. Even if Pokemon Go does not directly contribute to Nintendo's earnings, it owns other characters like Super Mario and Zelda. These things were factored in and boosted its shares."

But Yasuda added the firm's shares may rally again after an "adjustment period".

The smartphone app has now been launched in more than 40 countries, but until last week Japan - where Nintendo started the mythical creature franchise 20 years ago - was kept waiting.

Pokemon, short for "pocket monsters", has been a constant in Japan since being launched as software in 1996 for Nintendo's Game Boy console.

Authorities in a number of countries have expressed safety and other concerns about the craze.

Players from San Francisco to Lagos have been warned after trespassing, including some youngsters crossing the Canada-US border.

Some walked into sensitive military facilities and a nuclear power plant, while other players found themselves the victims of robbery or violent crimes.

The Japanese government issued a rare safety guide warning over dangers gamers could face, from heat stroke to online scams.



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